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An Integrated Vendor-Buyer Model with Stock-Dependent Demand

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  • Anders Thorstenson
  • Mohsen S. Sajadieh, Sharif University of Technology, Iran, Islamic Republic of
  • Mohammad R. Akbari Jokar, Sharif University of Technology, Iran, Islamic Republic of
  • CORAL - Centre for Operations Research Applications in Logistics
  • Department of Business Studies
An integrated vendor-buyer model for a two-stage supply chain is developed and analyzed. The vendor manufactures the product at a finite rate and delivers it in a number of equal-sized batches to the buyer. The items delivered are presented to the end customers in a display area and/or are kept in the buyer's warehouse. The demand is assumed to be positively dependent on the amount of items shown in the display area. The proposed model determines the buyer's optimal shipment quantity and number of shipments, as well as the vendor's optimal production batch. The objective is to maximize total supply-chain profit. The numerical analysis shows that as long as the maximum display area is not used, it is more valuable for the buyer and the vendor to cooperate in situations when the demand is more stock- dependent. It also shows the effect of double marginalization in this integrated vendor-buyer model.
Original languageEnglish
Title of host publicationProceedings of 20th International Conference on Production Research : Science and Technology to Promote Harmonized Production
PublisherUniversity of Science and Technology of China Press
Publication year2009
Publication statusPublished - 2009
Event20th International Conference on Production Research - Shanghai, China
Duration: 2 Aug 20096 Aug 2009


Conference20th International Conference on Production Research

    Research areas

  • Buyer, Double Marginalization, Integrated, Inventory, Production, Vendor

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